Question: I am confused if I will lose my house in Chapter 7 Bankruptcy as I am not understanding the Equity Exemption rule. My house is worth $230,000. I owe $105,000 on the first & $60,000 on a HELOC. I am unemployed and my unsecured debt is $60,000. If I file bankruptcy can the mortgage holders force me into foreclosure if I am up do date with payments? I am getting conflicting advice from attorneys.
Answer: -Unfortunately we are not bankruptcy attorneys so maybe someone else can shed some light on this topic. I do know that a Chapter 7 is a wipe out and therefore you would liquidate all your assets to pay off all your creditors. An attorney is hired to help “protect” those assets, like personal belongings. The trustee or attorney who represents the court and the creditors will look at all the assets (house, car, furniture, equipment) anything of value and decide what must be liquidated to pay some of the debt that was wiped out. So depending on whether or not your home has any value, it would be in your best interest to find a good attorney or maybe even investigate different Chapters of bankruptcy’s to make sure Chapter 7 is the way to go.
I was laid off 2 years ago and am unemployed. I will not be able to make my mortgage payment after May. I have one of those interest only mortgages. My house value from what I can tell by looking at recent sale prices to similar houses is about 200 to 210k. My current mortgage is total of 225k (180k first, 45k second). I have been looking for a job but it has been very difficult and I do not think I will be able to find one soon enough. I used all of my 401k and maxed out my CC (40k) debt mainly to pay my mortgage. Looking back I should have just let go of the house a long time ago, I guess I was too proud to do it.
I need advice on what to do now. If I can find any job I would take it. I am willing to work 3 or 4 jobs if I can. But I don’t think its gonna be possible. Not only will I not be able to pay my mortgage after may, I will not be able to pay anything else, including my car loan (10k left on it). So my car will be repossessed shortly after.
I am considering filing for chapter 7 bankruptcy. If my house forecloses, am I liable for the difference in price of the home and mortgage? I read somewhere about trying to do a short sale, will that help any given my situation?
Why not contact you mortgage or note holder and tell them the circumstances. There is a great possibility that they will be able to give you an idea of what they are able to do. You could also talk to an attorney, maybe one that specializes in real estate or bankruptcy and they would have current info on how you could protect your assets. From what I understand the short sale is when you sell to a buyer and the bank takes less that what is owed on the property.If I’m not mistaken you would be selling the home. I’ve also heard that there is a plan that some lenders offer that allow you to restructure or modify your loan. The worst thing to do though is nothing. Hope things work out.
In your situation where there isn’t currently positive income but what you owe is close to the value of your home, then a short sale would probably be the right choice. Chapter 7 is not a cure all, you could still be liable for what you owe the bank. You may find the hardship letter template available here usefull…
I am in a similar situation. My husband and I have not been able to make our mortgage payments for almost a year. We were BOTH working at the time, but we had daycare expenses and my husband works 1 hour away the rest of your money goes to pay for the other bills, gas to get back and forth to work, and groceries. Then to make things worse, I had to stop working in January,and don’t know when I can return to work. And my husband got laid off in February. He JUST got called back to work last week. We have already had our car repossessed last fall, and now our house is up for sheriff’s sale in about 10 days. In your case however, you are ahead of the game a little. I just found out that we DO have another option, which is a short sale. I wish we would have known about this sooner. From my understanding, a short sale is A LOT easier on your credit than a foreclosure. If you do a short sale, you should be able to buy a house in about TWO years in comparison to if you let your home go into foreclosure, which will hold you back for SEVEN years for buying another home. (Depending on your credit, obviously.)
So in my opinion, doing a short sale is hands down your best option.
Good Luck
We had to file bankruptcy and were able to buy a home within 2 years of it becoming final. All does not come to and end with a bankruptcy or foreclosure – Good luck. I know where you are coming from, there’s just not enough money to go around.
Doing nothing is the issue. The lender will take your home back in FC. The FC will be on your records 7 yrs I think. BK would be on for 10 yrs and most folks that file a BK 13 still must pay the mortgage and can’t so BK ends up being dismissed by the judge and the FC happens anyway. Now you have a BK and FC on your records. As a Loan Officer I did loans 1 day out of BK. I haven’t done a loan since 2006 so I can’t tell you how much the rules have changed, but do some internet research “Loans with BK on record”. In a Short Sale the lender agrees to accept a smaller payoff amount than was owed in writing and all is forgiven no FC shows on your Credit Report. Only thing is you will have 90 days lates or better on your mtg record. All your lates can be wiped out by a good Credit Repair Agency – Veracity or Lexington Law. I have done a short sale and found my client a new home close by for less than he was paying on the NOD home before we completed the short sale. One tidbit of info if you are in FC and the investor can’t stop the FC because the lender won’t cooperate, Litton, Ocwen, Saxon and a few more come to mind, then before the FC shows up on your Credit Report find an apartment to move into. Landlords for apartments see a FC as an eviction even though the homeowners haven’t been put on the streets by the sherrif for four (4) years after the FC.